Anthony Bolton: The guru who believes in charts

02.06.2006

Fidelity’s Anthony Bolton is the nearest thing the UK’s staid fund management sector has to a genuineinvestment guru. A famously modest man, Bolton has fought shy of publicity over the years – but lastweek he gave a rare public masterclass in stockpicking to a packed audience at the City’s Securities andInvestments Institute. Since 1979, Bolton’s flagship Fidelity Special Situations fund has turned a £1,000investment into about £149,000 today. How does the man himself reckon he’s done it?

First, through personal meetings with thousands of companies – plus, crucially, repeated follow-upmeetings – in order to uncover the occasional investment gem. Second, by moving in the oppositedirection to the herd with the aim of pre-empting the market. And third – and this is the big surprise – byjudicious use of technical analysis, or ‘chartism’.

Chartism, which involves the close study of past patterns in stock prices to determine current investmentdecisions, is derided by many investment purists as pseudo-scientific mumbo-jumbo – not to mention acomplete waste of time. So Bolton’s audience might have been a bit surprised to hear the great man“reveal himself as a closet chartist”, reports Patrick Hosking in The Times. But Bolton, who manages£6.5bn on behalf of a quarter of a million people, was clear: “I’ve found charts very useful, particularly onbigger companies, especially for timing. When the technicals [ie, chart patterns] confirm thefundamentals, I use them that way.” In particular, says Bolton, charts have helped stop him from buyinginto a blue-chip too soon. “To be too early on a stock can be costly. [Using charts] is a healthcheck. It’s abit like going to the doctor.”

So what are Bolton’s views on the current market turbulence? In short, not desperately encouraging: “Ithink it could be the end of the bull market. The correction could be months, not days.” Right now, Boltonis finding value in blue-chips rather than small companies, and his contrarian instincts mean that hefavours oil firms – moving against the prevailing shift of money away from oil and gas and into miners. Inaddition, he is 15% overweight in media stocks, keen on NTL and ITV, and is also heavy in travel andleisure and pharmaceuticals, while shunning the banking sector.

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